2H 2024 Outlook: In 2H 2024, SLB’s (SLB) management expects strong international market activity, digital sales growth, and the company’s cost efficiency improvement initiatives to help grow its FY2024 adjusted EBITDA by “mid-teens.” Over the long term, the long-cycle natural gas and deepwater projects, production and recovery, and secularity in digitization and decarbonization will benefit the company’s portfolio. SLB will also look to expand its capability through OneSubsea and the pending acquisition of ChampionX.
Revenue And EBITDA Moved Up in Q2: SLB’s all four operating segments witnessed a quarter-over-quarter revenue rise in Q2, although the growth rates were dissimilar. Its Digital & Integration segment saw the sharpest revenue increase in Q2 (10% up), followed by Production Systems (7% up). The company’s adjusted EBITDA improved by 11.2% in Q2 2024 compared to Q1 2024. Geographically, the company’s International market growth was sharper than North America’s in Q2. Capacity expansions, natural gas development projects, and production recovery in international territories caused this growth. Plus, the company’s international offshore market exposure strengthened its performance in Q2.
Recently, the industry witnessed investments in long-cycle gas development projects and production and recovery activities. Much of these investments occurred in Europe & Africa, Latin America, the Middle East, and Asia. However, weak US onshore drilling activities curtailed some growth momentum.
Cash Flows Deteriorated But Buyback Continued: SLB’s cash flow from operations declined in 1H 2024 compared to a year ago, due primarily to higher working capital requirements. Its FCF also decreased over this period. Due to the higher debt level, debt-to-equity (0.56x) increased compared to FY2023. During Q2, it repurchased shares worth $465 million. You may read more about the company in our previous article here.
Thanks for reading the SLB take three, which is designed to give you three critical takeaways from SLB’s earnings report. Soon, we will present a second update on SLB earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
